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Wells Fargo (WFC) Gains But Lags Market: What You Should Know

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In the latest trading session, Wells Fargo (WFC - Free Report) closed at $54.28, marking a +0.44% move from the previous day. The stock lagged the S&P 500's daily gain of 0.82%. At the same time, the Dow added 0.79%, and the tech-heavy Nasdaq gained 0.79%.

Coming into today, shares of the biggest U.S. mortgage lender had gained 0.9% in the past month. In that same time, the Finance sector gained 4.07%, while the S&P 500 gained 3.94%.

Investors will be hoping for strength from WFC as it approaches its next earnings release, which is expected to be January 11, 2019. On that day, WFC is projected to report earnings of $1.19 per share, which would represent year-over-year growth of 22.68%. Meanwhile, our latest consensus estimate is calling for revenue of $21.27 billion, down 3.53% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.28 per share and revenue of $86.12 billion. These totals would mark changes of +4.14% and -2.3%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for WFC. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. WFC is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that WFC has a Forward P/E ratio of 12.61 right now. This valuation marks a premium compared to its industry's average Forward P/E of 11.47.

Also, we should mention that WFC has a PEG ratio of 1.13. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Banks - Major Regional stocks are, on average, holding a PEG ratio of 1.17 based on yesterday's closing prices.

The Banks - Major Regional industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 98, which puts it in the top 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.




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